Trusts fall into two main categories: revocable and irrevocable. Revocable trusts are set up by the individual (known as the “grantor”), often for their own benefit and the benefit of their family, and can be cancelled by the Grantor at any time. Irrevocable trusts cannot be cancelled by the Grantor. Both types of trusts can be either living trusts or trusts which take effect upon death, known as testamentary trusts.
Life insurance trusts and created to hold life insurance policies, and usually meant for funds to be available to pay estate taxes. This is especially useful when a person has a lot of real estate at the time of their death, but they lack liquid assets. Such a person might have a large tax on the value of all of their real estate, but they would need cash to pay the tax. This is where a life insurance trust can help.Spendthrift trusts are useful for beneficiaries who are not responsible enough to handle their money. These trusts are also valuable if the individual has creditor issues or if there is a potential divorce situation. A trustee is appointed to manage the money for the individual.Trusts in general are a useful device to avoid probate in multiple states when real estate is owned in multiple locations. Following is the list of various additional Trusts that can be created for different purposes:
Qualified Personal Residence Trusts (QPRTs) is another useful estate planning tool, it allows to remove the personal residence and vacation home from the estate and thus reduce estate tax
Qualifying Domestic Trust (QDOTs) are used when one of the spouse who is to receive inheritance is not a US citizen. This trust allows an individual to pass their assets on to their spouse if the spouse is a foreign citizen and does not have unlimited Marital Deduction.
Supplemental needs trusts are useful for individuals who are disabled and are entitled to government benefits. The trust is used to provide for the individual’s needs which are not covered by the government benefits.
Medicaid Trust are created for Medicaid planning purposes. This type of trust is a means of preserving assets against the possibility of a Medicaid lien.
Trusts are not difficult to establish. A qualified attorney writes a trust that will serve your purpose. Assets such as property deeds and re-titled bank and brokerage accounts are then transferred into the trust. The process takes only a matter of weeks, yet can be invaluable to your—and your loved ones’—security and prosperity and last as long as three generations. In an individual sets up a trust, but it was never funded, as none of their assets were transferred to the trust; the Trust was not helpful just when it